Heads-Up: Bitcoin Bitcoin has had a dramatic rally since the election, from $68K in early November to $95K today, a run-up of 40% in just over two weeks. This is noteworthy and had we not already been well invested in BITO calls, we would be buying them with both hands now (except instead of BITO calls, IBIT calls may be a better, if not easier bet. See analysis below). It hasn't been just since the election, as Bitcoin has risen 80% from its lows in early September. This is where charts provide the cleanest perspective: BTC Eighteen months of EW structure suggesting the path of least resistance for the immediate future, i.e., a potential doubling from current prices. If so, we are looking at a 5X to 10X return on every call we buy, expiration to expiration. BITO Calls From October 18th Bitcoin has roared ahead 40% to today's highs. Meanwhile, our BITO Jan 17th $20C has risen close to 400%, 10X the return of Bitcoin. What's ahead? The chart above suggests another 80-100% upside for Bitcoin into 2025. Even half as much a run should allow for another 400% or more return in Bitcoin ETF calls. Yes, the rug can get pulled at anytime, ergo a 50% trailing stop and even then, there are such things as puts.....but we'll save that story for another price structure: Breaking down, bearish and most importantly, no where to be seen at present. Premium Service Active BITO calls - unexpired, still well above trailing stop levels and outperforming the underlying asset class (Bitcoin) by a mile. Bitcoin - New Option Vehicles This week opened two more Bitcoin option trading vehicles, one of which requires a closer look as an alternative to trading BITO options. Both GBTC (Greyscale Bitcoin Trust) and IBIT (iShares Bitcoin Trust) now trade calls and puts on their underlying shares. The former's options are too thinly traded (for now) for our purposes, but the latter seems to have a robust following and attendant liquidity. IBIT $53.70 - Ten 2-Month Strikes Out Of The Money As between the two choices, IBIT above and BITO below, the volume (and thus liquidity) advantage is with IBIT. Compare bid-ask spreads and ask yourself, which one would be easier and cheaper to buy and/or sell, vis a vis bid/ask slippage? Clear win to IBIT...so far. More choices are coming. BITO $25.50 - Ten 2-Month Strikes Out Of The Money Blast From the Past Weekend Update: New B&H Pick - MSTR by Allan Harris November 28, 2020 The Best Way to Own Bitcoin in the Stock Market The link above will take you to a report published this week by Citron Research, a mostly, "short this over-hyped stock" advisory service with an occasional long recommendation (they were short TSLA for five years before seeing the light and going long in October, 2018). The report covers the salient point of owning this stock: An undervalued Cloud software company with $700M of Bitcoin thrown in, "to boot." Within the Citron report there are numerous links that will fill in the compelling reasons to own this company longer-term. Accordingly we are adding MSTR to our new "Buy & Hold" recommendations, joining TSLA, PLTR and GBTC. Think of MSTR as another GBTC, only it's generating $500M a year in profits from cloud software services, and unlike GBTC, the stock trades options. Performance Updated Nov 20, 2024
